Focus on mid and affordable segment continues in Q1 2021, nearly 70% of the new launches in the sub INR 10 million category: JLL

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- Residential sales recover over 90% to pre-Covid levels in Q1, 2021 - Q1, 2021 witnessed new launches of 33,953 residential units, a jump of 27% over Q4, 2020 - Unsold inventory increased marginally to 470,750 units - Residential sales at 25,583 units in the first quarter of 2021 over 27,451 in Q1, 2020 MUMBAI, India, March 26, 2021 /PRNewswire/ -- Residential sales in Q1 (Jan-March) 2021 recovered to more than 90% of the volumes witnessed in Q1 2020 (pre-Covid) across the top seven cities, according to JLL Q1 Residential Market Update - Q1 2021 released today. The cities including Chennai, Hyderabad, Kolkata, and Pune surpassed the sales volumes of Q1 2020. Overall sales increased by 17% on a sequential basis. Importantly, sales either improved or stayed at similar levels (in Q1 2021 when compared to Q4 2020) in majority of the residential markets under consideration. Mumbai has consistently been the largest contributor to sales in the last four quarters. In Q1 2021, Mumbai accounted for 23% of the sales, followed by Delhi NCR with a share of 21%.

However, Kolkata saw the maximum increase in sales activity in Q1 2021 in comparison to the fourth quarter of 2020. In Kolkata, the offtake of residential units in Q1 2021 was driven by South Suburbs (Joka, Kasba, Behala, Jadavpur, Tollygunje) and East Suburbs (EM Bypass, Rajarhat, Topsia) with a combined contribution of more than 70%.

Residential market reached more than 90% of pre-Covid sales Q1 2020 (in units) Q1 2021 (in units) Recovery Sales in Q1 2021 as a proportion of sales in Q1 2020 Bengaluru 4,186 2,382 57% Chennai 2,453 3,200 130% Delhi NCR 5,941 5,448 92% Hyderabad 3,027 3,709 123% Kolkata 1,259 1,320 105% Mumbai 6,857 5,779 84% Pune 3,728 3,745 100% Total 27,451 25,583 93% Mumbai includes Mumbai city, Mumbai suburbs, Thane city and Navi Mumbai Source: Real Estate Intelligence Service (REIS), JLL Research Chennai - sales was driven by Southern Suburbs (Perungudi, Pallavaram, Medavakkam, Navalur, Thalambur, Nanganallur) which accounted for nearly 60% of the total offtake during the quarter.

Hyderabad - the Western Suburbs (Gachibowli, Manikonda, Kukatpally) submarket accounted for more than 65% of the sales during the quarter.

Pune - North East (Viman Nagar, Kharadi, Wagholi) and North West (Hinjewadi, Wakad, Baner) accounted for 67% of the sales during the quarter.

Sales volume increased across most markets Q2 2020 (in units) Q3 2020 (in units) Q4 2020 (in units) Q1 2021 (in units) Growth (%) Q1 2021 over Q4 2020 Bengaluru 1,977 1,742 2,535 2,382 -6% Chennai 460 1,570 2,500 3,200 28% Delhi NCR 2,250 3,112 4,440 5,448 23% Hyderabad 1,207 2,122 3,570 3,709 4% Kolkata 481 390 438 1,320 201% Mumbai 3,527 4,135 5,026 5,779 15% Pune 851 1,344 3,323 3,745 13% Total 10,753 14,415 21,832 25,583 17% Mumbai includes Mumbai city, Mumbai suburbs, Thane city and Navi Mumbai Source: Real Estate Intelligence Service (REIS), JLL Research 'The sustained growth in sales presents clear signs of demand and buyer confidence coming back to the market. This has been on the back of historically low home loan interest rates, stagnant residential prices, lucrative payment plans and freebies from developers and government incentives such as the reduction of stamp duty in states like Maharashtra and Karnataka (for affordable housing). The ease of lockdown restrictions and the commencement of the vaccination drive have further aided in bringing buyers back to the market,' said Dr. Samantak Das, Chief Economist and Head Research & REIS, JLL.

'In the fourth quarter of calendar year 2020, India's economy returned to growth territory, recording a 0.4% rise in GDP. In tandem with the GDP growth, the pace of recovery in the residential market intensified with sales increasing by 51% when compared to the previous quarter. In Q1 2021, sales of residential units continued an upward trajectory. Sales, at the overall level, increased by 17% on a sequential basis,' he added.

The Covid-19 pandemic tilted the scale further in favor of established developers. As the sector shows signs of recovery, prominent developers are expected to be at an advantage and capture a greater share of the market. Homebuyers have become even more cautious in their home purchase decisions. There is an increased preference for investing in projects by developers with an established track record. Only credible developers, who have execution capability as well as quality products, and conduct their business in a transparent manner will be able to operate in the post-covid era in a sustainable manner. Ultimately, this will lead to greater transparency and improved consumer sentiment in the market.

'The Government is committed to boost affordable housing. The recent Union Budget has extended the benefit of additional interest deduction on home loans for first-time homebuyers in the affordable segment. Further, there is a time extension to claim the tax holiday on profits from affordable housing projects until March 2022. The housing loan going below 7% for the first time in the last decade also triggered sales in all segments in the residential real estate. The buoyancy in the market manifested in the form of low mortgage rates and stable prices are expected to continue and attract fence-sitters and serious end users,' said Siva Krishnan, Managing Director, Residential Services (India), JLL RBI is leading the way to recovery by holding policy rates at historically low levels to initiate a cycle of consumption led growth. As concerns related to jobs and a stable flow of income are alleviated, buyers are coming back to the market to make the most of this 'great time to purchase a house'.

New Launches scale up, focus on affordable homes continues Q2 2020 (in units) Q3 2020 (in units) Q4 2020 (in units) Q1 2021 (in units) Growth (%) Q1 2021 over Q4 2020 Bengaluru 6,135 1,074 4,335 5,469 26% Chennai 182 1,487 2,892 5,036 74% Delhi NCR Negligible 699 2,244 4,734 111% Hyderabad 5,034 5,396 10,313 8,591 -17% Kolkata Negligible Negligible 638 583 -9% Mumbai 2,294 2,242 3,223 4,616 43% Pune 1,135 1,756 3,140 4,924 57% Total 14,780 12,654 26,785 33,953 27% Mumbai includes Mumbai city, Mumbai suburbs, Thane city and Navi Mumbai Source: Real Estate Intelligence Service (REIS), JLL Research The first quarter of 2021 witnessed new launches of 33,953 residential units, a jump of 27% over the last quarter of 2020. Hyderabad continued to dominate new launches and accounted for more than a fourth of the overall launches during the quarter. Bengaluru, which formed more than 16% of the new launches followed. The markets of Delhi NCR and Chennai witnessed a substantial increase in launch activity during the quarter. New launches are still at 84% when compared to the pre-Covid levels of Q1 2020. Developers across the markets under review remain focused on the completion of under construction projects and clearing their existing inventory.

Development focus on mid and affordable segments continues in Q1 2021 with 69% of the new launches in the sub INR 10 million categories. In the coming quarters, the focus on these price segments is expected to continue with developers trying to reap the benefits of strong pent up demand in these segments. Most of the new launches in the markets of Bengaluru, Hyderabad, and Pune were in the sub INR 10 million category Bengaluru - 77%, Hyderabad - 76%, Pune - 100%.

Unsold inventory increases marginally Q4 2020 (in units) Q1 2021 (in units) Growth (%) - Q4 2020 over Q3 2020 Aggregate (7 cities) 462,380 470,750 2% Top 7 cities include Delhi NCR, Mumbai, Bengaluru, Chennai, Hyderabad, Pune and Kolkata Mumbai includes Mumbai city, Mumbai suburbs, Thane city and Navi Mumbai Source: Real Estate Intelligence Service (REIS), JLL Research As new launches outpaced sales, unsold inventory at various stages of construction across the seven markets under review increased marginally from 462,380 units to 470,750 units. Mumbai, Delhi NCR, and Bengaluru together account for 70% of the unsold stock. An assessment of years to sell (YTS) reveals that the expected time to liquidate this stock has increased from 4.2 years in Q4 2020 to 4.6 years in Q1 2021.

It's a 'buyer's' market with price continuing a downward trend Residential prices in the majority of India's residential markets have remained stagnant in the past few years. In Q1 2021, prices remained largely stagnant when compared to the previous quarter, across all the seven markets under review. This being said, it is important to point out that few developers in certain markets are providing moderate price discounts to boost sales. Moreover, developers are offering attractive freebies including payment schemes such as no EMIs for a year, no stamp duty and so on to attract homebuyers who pressed 'pause' in the last few months. This has led to a reduction in 'effective prices. This rationalisation combined with reduced home loan rates has further improved affordability in the residential market.

As developers continue to focus on recovering the volumes lost amidst the pandemic and gaining a foothold in their respective markets, prices are expected to be largely range-bound across most of the markets in the short-term.

Sustained growth of the sector expected in 2021 Guided by the expected economic growth trajectory, the uncertainty around the stability of jobs and incomes is only expected to reduce in the coming quarters. This is likely to have a direct positive impact on the housing sector with enhanced buyer confidence.

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